Lupin stock in 2017 global worst-performer list, says Evaluate report

Lupin was among the five worst-performing mid-cap pharma stocks globally in 2017, according to a report by Evaluate — an UK-based market intelligence firm. The drug major’s stock price fell 40 per cent and its market capitalisation declined $3.9 billion to $6.1 billion in 2017.

US Food and Drug Administration’s warning letters to two Lupin plants in Goa and Indore in November was the main reason for the decline in the stock price, analysts said. The company’s share price tanked 20 per cent in November.

Other major losers include Tesaro, Hikma Pharmaceuticals, Opko Health, and Mallinckrodt. Their share prices dropped 38-55 per cent last year. The mid-cap stocks comprise companies with market capitalisation between $5 billion and $25 billion. 

Evaluate’s pharmaceutical sector 2017 review was released earlier this week.

An email query sent to Lupin remained unanswered.

Major health care indices in the US, Europe, and Japan gained in 2017 as fears about the economic impact of Donald Trump’s US presidency failed to materialise, the report shows. In comparison, the BSE health care index remained flat, while the Nifty Pharma fell 6.9 per cent in 2017.

The scrips of Sun Pharmaceutical Industries, Dr Reddy’s Laboratories, and Glenmark also fell during the year.

“The warning letters were a setback. It came as a surprise to the management. Even investors were expecting that the Goa and Indore plants will be cleared in the inspection,” said Amey Chalke, analyst with HDFC Securities.

A delay in lucrative product approvals for the company was another overhang.

The market is betting big on the launch of key drugs like Levothyroxine and early resolution of regulatory issues.

Chalke expects the growth trajectory to resume in 12 months. The company is seeking help from consultants to resolve the issues of warning letters.